A goods container is offloaded at the Mombasa Port. Imbalance between exports and imports starved the country of foreign exchange earnings. [Gideon Maundu, Standard]
Kenya’s current account deficit was dented in the first three months of this year after imports substantially outweighed exports.
According to the latest figures by the Kenya National Bureau of Statistics (KNBS), the current account deficit more than doubled to Sh123.2 billion between January and March compared to Sh43.4 billion in the same period last year. A decline in international merchandise, said the national statistician, was mainly to blame for the trade imbalance.
During the period under review, exports dropped by 2.3 per cent to Sh152 billion even as imports went up by 32.4 per cent on free on board basis to Sh 411.6 billion.
“International merchandise trade, which includes exports and imports of goods registered a deficit of Sh259.6 billion in the quarter under review, an increase of 67.3 per cent from a deficit of Sh155.2 billion in the first quarter of 2016,” said the Quarterly Balance of Payments Report.
A deteriorating current account deficit means that the country lost critical foreign exchange cash, particularly the United States dollars, as most of it was used to get goods from the international market. Kenya’s foreign cash account is mainly boosted by earnings from exports and tourism as well as domestic remittances.
There were increased earnings due to travel inflows following improved tourism arrivals in the quarter under review.
Money sent back home by Kenyans abroad, or Diaspora remittances, also increased by 5.5 per cent to Sh45.1 billion in the first quarter of this year from Sh42.8 billion in the first quarter of last year.
Generally, however, the country received more cash than it sent out, with net financial inflows more than doubling from a surplus of Sh133.1billion in quarter one of last year to a surplus of Sh288 billion this year.
According to the statistics body, most of the cash was used for Government projects such as the first phase of the Standard Gauge Railway (SGR).